iPad component costs adjusted, estimated to cost Apple $260
With the iPad now in users' hands and its internal components revealed, iSuppli has adjusted its estimated cost to Apple for the 16GB Wi-Fi model higher, to $259.60, due to more silicon than it had anticipated.
That's more than $40 higher than a preliminary estimate provided in February, soon after the iPad was revealed. But the total is also well below the $499 starting price for the 16GB Wi-Fi iPad.
According to BusinessWeek, that total skewed higher once iSuppli saw the components of the actual product, because the shipping iPad includes more silicon chips than it expected. One example: the iPad uses three chips for control of the touchscreen.
That screen is the most expensive component in the device, costing $95. That total is up from the $80 assumed in February's estimate. The custom-manufactured LCD 9.7-inch IPS screens have been supplied by LG, Samsung and Epson. The special design of the iPad reportedly makes its display twice as expensive as that of a typical netbook.
Memory costs with the iPad amounted to $29.50 for the 16GB model, $59 for the 32GB model, and $118 for 64GB of storage. And the custom-built A4 processor is estimated to cost $26.80, up nearly $10 from the February projection of $17. And the rear case, machined from a single billet of aluminum, cost $10.50.
iSuppli estimated that the 32GB iPad, which sells for $599, includes $289.10 in materials, while the $699, top-of-the-line 64GB Wi-Fi iPad carries a cost of $348.10.
iSuppli principal analyst Andrew Rassweiler said that more than 40 percent of the costs of the iPad are associated to powering the touchscreen display and components of the user interface.
In February it was alleged that Apple could lower the price of the iPad if initial sales are not as strong as the company hopes. That information was revealed this week after executives from the Cupertino, Calif., company allegedly told one analyst. Management reportedly said it "will remain nimble" in pricing the iPad.
But with opening day sales of more than 300,000, exceeding the first-generation iPhone, Apple likely is not looking to reduce the price of the iPad. The 3G version of the hardware, which offers wireless connectivity through a cellular data subscription and carries a $130 premium, is set to arrive later this month.
That's more than $40 higher than a preliminary estimate provided in February, soon after the iPad was revealed. But the total is also well below the $499 starting price for the 16GB Wi-Fi iPad.
According to BusinessWeek, that total skewed higher once iSuppli saw the components of the actual product, because the shipping iPad includes more silicon chips than it expected. One example: the iPad uses three chips for control of the touchscreen.
That screen is the most expensive component in the device, costing $95. That total is up from the $80 assumed in February's estimate. The custom-manufactured LCD 9.7-inch IPS screens have been supplied by LG, Samsung and Epson. The special design of the iPad reportedly makes its display twice as expensive as that of a typical netbook.
Memory costs with the iPad amounted to $29.50 for the 16GB model, $59 for the 32GB model, and $118 for 64GB of storage. And the custom-built A4 processor is estimated to cost $26.80, up nearly $10 from the February projection of $17. And the rear case, machined from a single billet of aluminum, cost $10.50.
iSuppli estimated that the 32GB iPad, which sells for $599, includes $289.10 in materials, while the $699, top-of-the-line 64GB Wi-Fi iPad carries a cost of $348.10.
iSuppli principal analyst Andrew Rassweiler said that more than 40 percent of the costs of the iPad are associated to powering the touchscreen display and components of the user interface.
In February it was alleged that Apple could lower the price of the iPad if initial sales are not as strong as the company hopes. That information was revealed this week after executives from the Cupertino, Calif., company allegedly told one analyst. Management reportedly said it "will remain nimble" in pricing the iPad.
But with opening day sales of more than 300,000, exceeding the first-generation iPhone, Apple likely is not looking to reduce the price of the iPad. The 3G version of the hardware, which offers wireless connectivity through a cellular data subscription and carries a $130 premium, is set to arrive later this month.
Comments
That's more than $40 higher than a preliminary estimate provided in February, soon after the iPad was revealed. But the total is also well below the $499 starting price for the 16GB Wi-Fi iPad.
Well one would hardly expect it to be over the $499 starting price, would one?
That number is rather meaningless, since it does not include research and development costs. I hope no one takes it seriously.
Or marketing costs. Or manufacturing overheads. Or shipping of components. Or quality costs. Or a whole bunch of other costs.
Well one would hardly expect it to be over the $499 starting price, would one?
Amen. I wonder what the assembly labor costs are?
the $699, top-of-the-line 64GB Wi-Fi iPad carries a cost of $348.10.
Apple ripped me off and all I got was this iPad!
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
For only $30 difference in cost between the 32GB and 16GB models, there isn't much justification in even offering a 16GB model.
Pricing should have been more like:
$499 32GB
$599 64GB
That number is rather meaningless, since it does not include research and development costs. I hope no one takes it seriously.
Unless I'm mistaken, the R&D as well as the Design costs have already been reflected on the last X man financial quarters... So that being said, the bottom line cost to build is certainly something the market watchers would find helpful in better forecasting Apples future profit potential.
Amen. I wonder what the assembly labor costs are?
I think people have said before... when dealing with a run of many hundreds of thousands or millions+ the assembly costs are really insignificant. Seems odd to me too... but I've read it quite a number of times. Finally this shouldn't come of any real shock... Apple is TOP in the industry for having well above 'the norm' profit margins. Apple (I believe) is still the #1 profit margin leader in the industry... However since Apple seems to be in THREE and some might argue FOUR or MORE industries, its hard to say what industry they're actually in anymore.
- Computer Industry?
- CE Industry?
- Cell Phone Industry?
- Music Industry?
- Movie Industry?
- Publishing Industry?
Hmm did I forget anything also maybe the last three be considered 'Media Retailer Industry?
Looking back at that list.. nobody would believe it if you said Apple would be deeply involved in ALL of them less than 10 after the day Jobs returned.
I think they need to stay competitive on the price.
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
When iPhone arrived, it kicked off a spike in all smartphone sales.
Part of the Android success is due to the fact that the iPhone is AT&T only in the US and carrier locked in most countries.See here:
Poll favors iPhone, minus carrier decision.
No. 1 U.S. smartphone BlackBerry was No. 3 in the survey conducted between March 30 and April 6 by the Silicon Valley/San Jose Business Journal, the choice of only 10 percent of those who responded.
Devices powered by Google Inc.'s Android operating system were No. 2, with 19 percent of respondents.
Both were far behind the Apple Inc. smartphone's 57 percent.
This will not happen with the iPad. It will not have a worthwhile tablet competitor for quite some time. Rather, it will compete with netbooks and low-end notebooks.
Well one would hardly expect it to be over the $499 starting price, would one?
Maybe my sarcasm perimeter broke today, but I think you might have missed the prediction that this baby cost well over $1,000 leading to the unveiling, and the overwhelming applaud when Jobs announced $499 as starting price.
I think they need to stay competitive on the price.
$499 is fine for now with no real competition out there.
Once Android and Chrome tablets enter the market, I would like to see a drop in the price or a bump in the specs.
For only $30 difference in cost between the 32GB and 16GB models, there isn't much justification in even offering a 16GB model.
Pricing should have been more like:
$499 32GB
$599 64GB
Why? Apple sold about all that they could make for the initial launch and order demand apparently remains strong.
Compare the entry level $499 iPad to the $549 HP Slate and there's no reason to believe that Apple's price is too high.
I think people have said before... when dealing with a run of many hundreds of thousands or millions+ the assembly costs are really insignificant. Seems odd to me too... but I've read it quite a number of times.
Actually, estimates of the assembly costs are around $7-10 per unit. That's about 1-2% of selling price. Not a huge number, but significant as it will add tens of millions of dollars in annual costs.
Apple ripped me off and all I got was this iPad!
You're within the time limit to return it if you're not happy with it.
http://www.appleinsider.com/articles...apple_219.html
That said, It easy to look at the what goes into the iPad in terms of component costs, but you have to consider all of the other factors including PROFIT. One post mentions the R&D, production costs and assembly cost. Other cost are packaging, advertisement etc.
Before Apple gets criticized too severely, there over a 100% markup on clothing and on limited brands even more. How much did you pay for your Latte this morning at your favorite Starbucks?
Hidden cost--Apple store and tech support.
That number is rather meaningless, since it does not include research and development costs. I hope no one takes it seriously.
Component costs are just the beginning as stated. R&D plus patent legalities, labor and manufacturing facility overhead are significant.
I'm a manufacturing engineer specializing in microelectronics so I know component costs are just the starting point.
When you take your car in for service, the charge is parts plus three times the parts cost for labor?it costs $100 to replace a $25 part.
Let us just compare the numbers for commodity part, 8GB MLC NAND FLASH in TSOP48:
- today's average spot price of 8GB MLC FLASH is $15, so spot price for 16GB corresponds to iSupply number of $29.50
- i am sure that Apple, as biggest consumer of FLASH memory in the world, pays a lot less then today's spot prices for FLASH:
-- the scheduled order quantities for iPhone, iPod and now iPad are huge!
-- Apple paid big amounts of money well in advance to Samsung and Toshiba to assure capacity and delivery as well as price
Thus, there are good reasons to believe that Apple negotiated FLASH prices that are well double-digit below spot prices. And because of relatively limited list of chips used in iPhone, iPod and iPad and their high volumes, it can be true for the other parts in iPad BOM, too.